Debanking: Financial Services as a Public Utility? By DREW A. PROUDFOOT, Partner, and AMY J. TAWNEY, Partner, Bowles Rice LLP In recent years, “debanking” has emerged as a significant issue within the financial services industry. “Debanking” refers to the termination of or refusal to provide financial services to certain individuals, businesses or entire commercial sectors. As debanking becomes an increasingly public concern, federal and state governments are introducing new legislation and regulations to address the perceived problem of financial exclusion. THE RISE OF DEBANKING Debanking primarily impacts businesses and individuals in high-risk sectors such as cryptocurrency, money transfer operators and even politically affiliated enterprises. Financial institutions rely on the denial of financial services as a measure to mitigate financial crimes like money laundering, fraud or terrorist financing and protect against financial risk. Banks are required by regulators to conduct thorough customer due diligence, often leading them to close accounts they perceive as risky or non-compliant with regulatory requirements. 6 WEST VIRGINIA BANKER
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